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Unlocking the benefits of secure payment Gateways: 3D and 2D secure explained

Financial Foundation

Unlocking the benefits of secure payment Gateways: 3D and 2D secure explained

DNBC Team DNBC Team

Jan 26, 2024

Table of Content

In the landscape of digital transactions, secure payment gateways are essential. Online shopping has surged and digital banking is widespread these days. Consequently, the potential for financial fraud and data breaches has risen dramatically.

As a result, there’s a rising need for stronger security in payment systems. 3D and 2D secure payment gateways are at the forefront of addressing this need. They play a significant role in making transactions safer.

This guide delves into these security protocols: 3D and 2D secure payment gateways. We will explore how they function and their impact on the world of online payments. We will also compare 3D and 2D secure payment gateways, pointing out their benefits. Then you will gain insights into which technology is better for different situations.

What are secure payment gateways?

Secure payment gateways are services that facilitate electronic payment processing during online purchases.

They serve as intermediaries between a merchant’s website and the involved financial institutions. Their main role is to transfer sensitive information like credit card numbers safely. They send such information from the customer to the issuing bank for approval. Once the bank decides, the gateways relay the transaction outcome to the merchant. They employ encryption and other security measures to safeguard data during transmission.

Merchants use secure payment gateways to offer a safe shopping experience. These gateways help reduce the risks of data theft and fraud risks. They adhere to high-security protocols and standards like the Payment Card Industry Data Security Standard (PCI DSS).

Secure payment gateways help prevent fraudsters and data theft
Secure payment gateways help prevent fraudsters and data theft

This creates a secure environment for online transactions. It gives peace of mind to both businesses and customers.

Understanding 2D payment gateway

What is a 2D payment gateway?

A 2D payment gateway is an online payment service that permits customers to make payments without entering a one-time password and without a security check. The term “2D” stands for two dimensions. It implies this process involves only two parties: the merchant and the customer.

Customers simply enter their payment details. They might include credit card number, expiration date, and card verification value (CVV). The transaction then proceeds without extra authentication steps.

Benefits of a 2D payment gateway

Simplified transaction process

2D gateways simplify transactions, omitting extra authentication layers. This results in a smoother, quicker checkout, ideal for fast-paced situations.

Higher conversion rates

The streamlined process may increase the likelihood of purchase completion by customers. It potentially leads to higher conversion rates for merchants.

Improved customer experience

The simplicity and quickness of 2D payment gateways enhance the shopping experience. Customers enjoy the benefit of a fast and smooth payment process. This can result in greater customer satisfaction and loyalty.

2D payment gateway provides a fast and easy process to elevate customer experience
2D payment gateway provides a fast and easy process to elevate customer experience

However, The 2D payment gateways’ benefits might come at a cost to security. Without additional authentication, they are more susceptible to fraud and data breaches.

Businesses should weigh these risks against the benefits before opting for this option. This careful consideration ensures a balance between user experience and transaction security.

Understanding 3D payment gateway

What is a 3D payment gateway?

A 3D payment gateway is an advanced type of online payment processing service. It enhances transaction security through a three-domain structure. It adds an extra step of authentication for safer online shopping.

The three domains in this system are:

  • Issuer Domain: This is the bank that issued the customer’s credit or debit card.
  • Acquirer Domain: This is the merchant’s bank or the financial institution receiving the payment.
  • Interoperability Domain: This includes the infrastructure provided by the card scheme (like Visa, and MasterCard) and the technology that supports the authentication process.

Through this payment gateway, customers usually need to complete an extra verification step. This step might require entering a password, an SMS code, or another method to verify the customer’s identity.

3D secure payment gateway adds an extra layer of protection
3D secure payment gateway adds an extra layer of protection

Variations of 3D payment gateway

There are two primary variations of 3D payment gateways:

3D secure 1 (3DS1)

It was the first and original version of the 3D Secure protocol. It usually involves a step where customers are redirected to a secure page managed by their bank. Then they must enter a password or a code to confirm the transaction. This code might be sent to them via SMS or generated by a special device.

3DS1 significantly enhances security. However, it may disrupt the shopping experience with extra steps and page redirection.

3D secure 2 (3DS2)

3DS2 is an updated, more user-friendly version of 3D Secure. It was designed to make the payment process smoother and fix some issues found in the first version. With 3DS2, the authentication often occurs within the merchant’s checkout page itself. This innovation makes the process much more seamless.

It uses a smart system that only asks for extra verification when needed, based on the risk level of the transaction. This version is also better suited for mobile and app-based payments and meets the latest legal standards.

Benefits of 3D payment gateways:

Enhanced Security

These gateways add extra security. By requiring another level of authentication, they reduce the risk of fraudulent transactions.

Improved reputation

Customers know 3D gateways are safer than 2D. Merchants using 3D gateways are seen as more trustworthy. This helps build customer trust faster.

Better Customer Experience

Extra security doesn’t mean hassle. Modern 3D gateways (3DS2) are smooth and easy to use. They keep things quick and simple for users.

Less Fraud and Chargebacks

Even with card details, the criminal needs a One-Time Password (OTP) to make payment. This protects customers’ hard-earned money. Also, the chargebacks are reduced, making it a trustable payment gateway.

Global Acceptance

Many banks and card companies worldwide use 3D secure protocols. This makes it easier for international transactions.

Differences between 2D and 3D payment gateways

2D payment gateway 3D payment gateway
Full form 2-dimensional secure payment gateway 3-dimensional secure payment gateway
Domains involved Customer (Issuer of the card)

Merchant (Acquirer of the payment)

Customer (Issuer of the card)

Merchant (Acquirer of the payment)

Interoperability (e.g., banks, card networks ensuring secure transactions).

Function Processes payments once cardholders input their personal card details along with the CVV Processes payments by requiring an additional authentication step, typically an OTP, after entering cardholder information.

Conclusion

Secure payment gateways are fundamental to ensuring the safety of online transactions. 2D secure payment gateway offers speed and simplicity. While the 3D payment gateway provides enhanced security with an additional protection layer.

The evolution from 3DS1 to 3DS2 showcases a commitment to enhancing user experience without compromising on security.

Choosing between these gateways requires a thorough understanding of their features and capabilities. Businesses and consumers should assess their specific needs to make an informed decision. This action helps ensure the chosen gateway meets its security and transactional requirements.

As digital payment landscapes evolve, staying current with payment gateway technology advancements is vital. This ensures online transactions stay secure, efficient, and user-friendly in the evolving digital landscape.

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Note: The content in this article is for general informative purposes only. You should conduct your own research or ask for specialist advice before making any financial decisions. All information in this article is current as of the date of publication, and DNBC Financial Group reserves the right to modify, add, or remove any information. We don’t provide any express or implied representations, warranties, or guarantees regarding the accuracy, completeness, or currency of the content within this publication.